Bitcoin Hard Fork Called Off, Averting Major Disruptions And Turbulence In Cryptocurrency

The Bitcoin community has been in a fight over the past three years that in recent months escalated to an all-out war over the seemingly trivial question of how to allow more transactions through the network.

In May, two groups teamed up to force a compromise that would push past the stalemate but left out of a critical constituent -- Bitcoin's main developers -- in order to do so. Their solution, a so-called hard fork, had the potential to split the network and create two competing chains, and the possibility has fueled acrimony in the Bitcoin world for months.

With the hard fork looming just a week and a day away, that coalition called off its plans Wednesday in a brief email sent by the lead developer on the team planning to hard fork, nicknamed SegWit2x for the two solutions it brought together in compromise (SegWit and a hard fork to a 2MB block):

"Our goal has always been a smooth upgrade for Bitcoin. Although we strongly believe in the need for a larger blocksize, there is something we believe is even more important: keeping the community together. Unfortunately, it is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time. Continuing on the current path could divide the community and be a setback to Bitcoin’s growth. This was never the goal of Segwit2x. ... We are suspending our plans for the upcoming 2MB upgrade."

(Dan Kitwood/Getty Images)

The price of Bitcoin jumped to around $7,800 on the news.

The signers include some of the CEOs who led the SegWit2x effort: Mike Belshe, CEO of Bitcoin security company BitGo; Wences Casares, CEO of Bitcoin vault company Xapo; Jihan Wu, CEO of mining equipment manufacturer Bitmain; Jeff Garzik, CEO of blockchain enterprise company Bloq; Peter Smith, CEO of Bitcoin wallet and data company Blockchain; and Erik Voorhees, CEO of crypto-to-crypto exchange Shapeshift.

The move comes shortly after CME announced it would launch Bitcoin futures and the price of Bitcoin reached all-time highs, around $7,500, and its market capitalization jumped to north of $125 billion, perhaps due to new money flooding in.

So-called chain split tokens which functioned like futures markets indicated that the original chain with a 1MB block was strongly favored by users -- about 85% to 15% -- which may have factored into the decision.

In the months leading up to what seemed like it would become the world's most expensive game of chicken, the two sides duked it out in increasingly bitter debates on Twitter, Reddit and email lists. While it may have momentarily concluded with one side backing out, it remains to be seen how this fundamental tension that remains in the community over how to scale the network will eventually be resolved.